Aftermath of the Cooling measures on Malaysian Properties

The cooling measures announced by the government in the 2014 budget resulted to lower-than-expected turnout at the major property fair held over the weekend, indicating dampening interest from buyers.

“Property developers and buyers are uncertain over where the market is heading. They are not sure how the real property gains tax (RPGT) and the Developer Interest Bearing Scheme (DIBS) work,” noted industry players.

Given the impact of the cooling measures, Hong Leong Bank Research (HLB Research) maintained its “neutral” stance on the property sector.

In its latest research note, HLB Research said that there might be a slowdown in demand for the medium to high-end segment as well as in economic growth and stricter lending policies by banks.

The research house’s survey also showed that developers are refraining from offering DIBS in their new projects, with some providing interest rebate schemes comparable to DIBS in high-rise projects.

“Developers acknowledged that they expect the cooling measures to adversely impact their sales,” said HLB Research.

For its Arcoris project in Mont Kiara, UEM Sunrise is reportedly offering cash rewards of RM4,000 per month for two years.

Meanwhile, the Real Estate and Housing Developers’ Association Malaysia is urging the government to further clarify the RPGT and DIBS.

“The new RPGT rate is supposed to be effective from January 1 next year, but no one is sure whether it applies only to new properties purchased then or also to those acquired in the last two or three years,” said association president Datuk Seri Michael Yam and reported by Business Times.

The market is expected to be soft in the next six months, while some developers are likely to delay their launches, he said, adding that the government “should monitor the situation and make adjustments if necessary.”

Nonetheless, for investors with medium to long term investment horizon, these are good times to pick up good bargains in the markets….happy hunting!

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